1/1 and 2/1 duplex - Class C

[Christina Linn]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $83,000
Cash invested: $16,600

This property is not what we would typically buy, as it is a C class property with only some potential. After some deliberation, we decided to offer $80k - suggested by seller's realtor. The seller checked her payoff and countered at $83k, which was just enough to pay off her loan and all her closing costs. This is now a STR and has turned out be a great investment!

What made you interested in investing in this type of deal?

This one was more about investing somewhere and helping an old lady who wanted out of real estate. The property itself was nothing special, but had been maintained fairly well. One unit was rented, which helped us make our decision since at least the mortgage would be covered.

How did you find this deal and how did you negotiate it?

A realtor called my mother-in-law and pretty much had it all spelled out already. We offered the suggested $80k and the seller countered at $83k. There wasn't much else on the market and we were ready to invest again, so we went for it.

How did you finance this deal?

We used traditional financing with a 12 year fixed-rate mortgage at 5.25%. We put 20% down.

How did you add value to the deal?

We didn't intend to add value to this deal, but after my son and I stayed in the front unit while working on other rentals I realized it might be a great STR. I listed on Airbnb and the rest has been amazing since. We will improve the unit during vacancies.

What was the outcome?

We learned about the value of STRs with the 1/1 unit in this duplex. The tenant in the 2/1 unit moved out and I am currently getting it ready to STR.

Lessons learned? Challenges?

Being open-minded certainly helped us here again. This property took us up to 18 rentals and I felt that we had enough steady cash flow to experiment with STRs. It turns out that I have made the most return on this property because of that. This started as an okay investment and turned into a great learning experience. The nice thing is that if at any point the STR thing doesn't work we can easily convert to furnished LTR.